Exam 9: Compound Interest: Further Topics and Applications

Find the monthly compounded nominal interest rate that is equivalent to an effective rate of 21%.

How long did it take $4625 earning 7.875% compounded annually to grow to $8481.61?

Calculate the missing interest rate (to the nearest 0.01%)

A four-year promissory note for $3800 plus interest at 9.5% compounded semiannually was sold 18 months before maturity for $4481. What quarterly compounded (annual) rate of return will the buyer realize on her investment?

-Calculate the missing quantities in Row

Calculate the missing interest rate (to the nearest 0.01%)

A mutual fund paid 3.5%, 4%, 3.5%, 6% and 5% over the past five years. If you had invested $1000 at the beginning of the five-year period, what was your investment worth at the end of the five-year period?

Loblaw shares in Table 9.3 will pay a $0.84 dividend in 2007. What must the share price be at the end of 2007 for a total rate of return in 2007 of 7%?

A sum of $10,000 invested in a fund at the end of 2003 would have declined to $2961 by the end of 2010. What compound annual rate of return did the fund realize during this period?

When discounted to yield 10.5% compounded monthly, a $2600 three-year promissory note bearing interest at 12.25% compounded annually was priced at $3283.57. How long after the issue date did the discounting take place?

Belleville Credit Union has established interest rates on its three-year GICs so that the effective rate of interest is 7% on all three compounding options. What are the monthly, semiannually, and annually compounded rates?

At what monthly compounded nominal rate of interest will money triple in eight years?

$5000 invested in a GIC earning 3.7% compounded semiannually matured at$5789.73. What was the term of the GIC?

At 14% compounded annually, an investment of $50,000 will grow to $1,000,000 in 22.86 years. How much longer will it take at 11% compounded annually?

A company's annual report states that the prices of its common shares had changes of 23%, 10%, -15%, and 5% during the past 4 fiscal years. If the shares were trading at $30.50 just after the 5% increase in the most recently completed year. a) What was the price of the shares at the beginning of the 4-year period? b) How much (in dollars and cents) did the price decline in the third year?

Many department stores charge 2.4% per month on overdue accounts. What is the effective annual rate in this situation?

Calculate the equivalent interest rate (to the nearest 0.01%)

A portfolio earned -13%, 18%, 5%, 24%, and -5% in five successive years. What was the portfolio's five-year compound annual return?

Calculate the effective annual rate for 14.4% compounded monthly.

Calculate the term of the loan or investment: